M AY / J U N E 2 0 1 2 R i g h t o f W a y 27
ere is an economic principle oen used in evaluating
business decisions known as opportunity cost. Webster
denes it as the “cost in terms of foregone alternatives.”
is principle can be applied to right of way professionals
who are faced with the decision of whether or not to work
in a state that requires real estate licensure. is decision
not only impacts the agent’s earning potential, it can also
impact their marketability in an increasingly competitive
industry.
Variances by State
For several years, a handful of states have required agents
who contract to purchase right of way possess a valid
real estate license for that state. e key word here is
‘contract.’ e requisite is derived from the denition
of a licensed broker found in a state’s real estate license
law. is denition does not dier greatly from state to
state, although it is draed to broadly include right of
way professionals in the opinion of the state’s Real Estate
Commission (REC).
North Carolina’s REC denes a real estate broker as
“…any person, partnership, corporation, limited liability
company, association, or other business entity who for
a compensation or valuable consideration or promise
thereof lists or oers to list, sells or oers to sell, buys or
oers to buy, auctions or oers to auction (specically not
including a mere crier of sales), or negotiates the purchase
or sale or exchange of real estate, or who leases or oers
to lease, or who sells or oers to sell leases of whatever
character, or rents or oers to rent any real estate or the
improvement thereon, for others.”
BY STEVEN B. CHASTAIN, SR/WA
Examining the impact on marketability and earning potential
The Strategies Behind
Real Estate Licensure
2 8 R i g h t o f W a y M A Y / J U N E 2 0 1 2
In North Carolina, an easement, compressor station, substation
or highway right of way purchased by a contract agent on behalf
of a client company meets the state’s established parameters
to suciently categorize the contract agent as a practicing
broker, thereby requiring licensure. However, in the state’s list of
exemptions, there is no mention of right of way professionals,
easements or persons contracted to acquire such rights.
By contrast, Colorado has a similar denition for a broker, yet
the state included language to exempt right of way professionals
and landmen from being licensed as brokers. An excerpt from
Colorado’s Real Estate Broker’s Law covering oil and gas land
professionals states, “Any person, rm, partnership, limited
liability company, association, or corporation, or any employee
or authorized agent thereof, engaged in the act of negotiating,
acquiring, purchasing, assigning, exchanging, selling, leasing, or
dealing in oil and gas or other mineral leases or interests therein
or other severed mineral or royalty interests in real property,
including easements, rights of way, permits, licenses, and any
other interests in real property for or on behalf of a third party,
for the purpose of, or facilities related to, intrastate and interstate
pipelines for oil, gas, and other petroleum products, ow lines,
gas gathering systems, and natural gas storage and distribution.”
Colorado provides similar exemptions for land professionals
working in telecommunications, wireless, electric and
transportation. ese exemptions were lobbied for by industry
professionals and reect the state’s approach to addressing the
disparities in the qualications required to be a right of way
professional compared to those required to be a real estate broker.
The Driving Factors
While most states do not currently require right of way
professionals to be licensed brokers, North Carolina is not
alone, nor was it the rst. Florida required licensing for right
of way professionals practicing in their state prior to North
Carolina. Texas does not require a broker’s license, however
the state does require right of way agents to register with the
state’s REC, undergo a criminal background check, submit
ngerprints and pay an annual registration fee. In Kentucky,
the REC required at least one right of way rm to use licensed
agents following a landowner’s complaint.
One byproduct of these requirements has been the emergence
of smaller, state-specic right of way/real estate rms with dual
functionality. Many of the professionals stang these rms
have prior experience in the municipal, pipeline, transportation
or telecommunications industries and are now competing in
the contract sector. In this role, they serve as active brokers
for residential and commercial real estate, as well as contract
brokers performing right of way acquisition for regional
utilities, municipalities and departments of transportation. A
common concern has become the competing loyalties between
project priorities and their listings, showings and closings. at
being said, these rms can play a vital role in providing a more
competent and qualied local agent pool from which to sta a
project. ey also bring a familiarity with the region as well as
some of the key players who can add value to the project.
The Firm Must Qualify
So you may be thinking, “Okay, for my next project I’ll just
hire some real estate brokers.” While that may be inevitable, it
will not be possible until the rm itself qualies as a real estate
rm within their state. According to the North Carolina REC,
“Every business entity other than a sole proprietorship shall
apply for and obtain from the Commission a rm license prior
to engaging in business as a real estate broker.”
Applying for a rm license requires that the rm make some
strategic planning decisions, which should likely involve their
corporate counsel. Possibly the most critical decision involves
that of choosing a qualifying broker. North Carolina’s REC
states, “e qualifying broker of a partnership of any kind must
be a general partner of the partnership; the qualifying broker of
a limited liability company must be a manager of the company;
and the qualifying broker of a corporation must be an ocer of
the corporation.”
If the rm does not employ a qualifying broker, it will have to
look for a suitable candidate who can serve in this capacity.
Rather than hire a real estate industry professional who lacks
right of way expertise, your ideal candidate should have right of
way expertise across multiple disciplines. is kind of strategic
In states like North Carolina, 75 hours of classroom training are
required before the real estate exam can be taken.
M AY / J U N E 2 0 1 2 R i g h t o f W a y 29
stang decision enables the rm to position themselves for
continued business opportunities in the respective state.
Once a rm designates its qualifying broker and meets the
remaining rm licensure requirements, the qualifying broker
will be held responsible for complying with all applicable
state real estate laws and REC rules. In this role, they will
also be responsible for reporting on behalf of the dierent
brokers employed by the rm. Since many rms compete
nationally, the qualifying broker may be called on to be
credentialed in multiple states. is requires familiarity with
those state’s laws, as well as annual continuing education,
passing state specic real estate law exams and annual
licensing fees at a minimum. e rm will likely also be
required to acquire rm real estate licenses for those states.
A nal hurdle for any rm to overcome is the tendency to look
at the qualifying broker as an anomaly of sorts. In essence,
an inconvenient necessity. e statutory responsibilities of
the qualifying broker are real and carry the full weight of law.
Failure to comply can aect the company’s bottom line and
its right to practice in a given state. e rm will want to be
especially sensitive to the qualifying broker’s concerns as they
relate to compliance and reinforce the importance of their role.
Finding a Broker-in-Charge
A broker-in-charge (BIC) is the term North Carolina uses
for the managing broker within a local real estate oce. For
example, your project eld oce would be your local real
estate oce and each would require a BIC. North Carolina’s
REC states, “To be qualied to serve as a broker-in-charge of a
real estate oce, a real estate broker shall possess at least two
years of full-time real estate brokerage experience or equivalent
part-time real estate brokerage experience within the previous
ve years or real estate education or experience in real estate
transactions that the Commission nds equivalent to such
experience and shall complete, within a time prescribed by the
Commission, a course of study prescribed by the Commission
for brokers-in-charge not to exceed 12 classroom hours of
instruction.”
e diculty in nding individuals who already meet this
requirement and are competent in the right of way profession
is challenging. e BIC is not required to be the right of
way supervisor managing the project, but they are legally
responsible for the activities of the brokers assigned to that
oce and its compliance with REC laws, rules and guidelines.
In matters regarding compliance, this person will report
directly to the qualifying broker.
In a state like North Carolina, if your right of way supervisor or
manager is not licensed, they cannot directly negotiate with a
landowner for property rights. Negotiations must be conducted
by a licensed broker. is requires a unique level of cooperation
and understanding between the unlicensed supervisor and the
BIC. e supervisor may be responsible for the overall project
completion, but it is the BIC who has the legal responsibility for
ensuring compliance.
An unlicensed supervisor will require orientation to and
familiarization with the state’s real estate laws as they aect
agent activities. As with the rm, in order for the relationship
to be successful, there must be buy-in to both the importance of
and the commitment to compliance. Anything less could create
an adversarial relationship between the supervisor and the BIC.
Hiring Licensed Brokers
In many cases the client is unaware of what a rm must do to
comply with the law. Since in-house employees are exempt
and rarely licensed themselves, they may assume compliance
is something that can be achieved quickly and with relative
ease. e fact that they have called a major provider typically
indicates that the project is too large or complex for their
regional resources to handle. Project scheduling is typically
already tight and right of way rms will need to develop
mobilization plans to get a project started while they continue
with measures to ensure stang compliance.
ere are generally three approaches adopted for hiring
licensed brokers:
1. Hire licensed brokers with right of way experience.
2. Hire licensed brokers without right of way experience
who will commit to the project over competing real estate
opportunities and provide them with right of way training.
3. Train and pay for experienced agents’ broker licensing.
North Carolina requires 75 hours of classroom training
(not online) plus successfully passing the state’s real estate
exam to become a provisional broker. A provisional
broker must work under a BIC until he/she completes 90
additional hours of commission approved training.
“State licensure is a
personal commitment
with individual
responsibilities…”
3 0 R i g h t o f W a y M A Y / J U N E 2 0 1 2
e project size and scope will determine whether you
employ one or all of these approaches. While a small project
could be handled by one agent, there are times when it makes
sense to hire a sole proprietor and sub-contract their services
for the acquisition portion of your project. You might also
investigate the possibility of identifying and sub-contracting
a regional rm, which helps alleviate the need for rm
licensure. Again, it is recommended that you consult legal
counsel and your respective state’s REC to ensure compliance
with state law.
Agent Accountability
Beyond the requirement for additional education and testing
is the agent’s accountability. State licensure is a personal
commitment with individual responsibilities extending
beyond the typical status of a eld agent. Every licensed
broker is held accountable for their professional behavior
and must answer to their state’s REC. e consequences of
misconduct reach beyond a single project and can now aect
their ability to work within the state. is is another reason
for total buy-in by the rm, the client and any unlicensed
project stakeholders who might want their agents to perform
tasks in a manner that does not align with real estate law.
An agent can rightfully refuse to perform tasks that are in
violation of the law. Firms should consult their qualifying
broker and/or the REC when in doubt and communicate
their ndings to all brokers across the project. Your agent
may be an at-will employee, but as a licensed broker they may
feel an ethical responsibility to report unresolved misconduct
by the rm, its BIC or other brokers directly to the REC.
Landowner Rights
ere are at least two substantial eects on the landowner.
e rst is found in the state’s agency disclosure requirement.
North Carolina requires all brokers to provide landowners
with a copy of the “Working with Real Estate Agents”
brochure and obtain their acknowledgement of its receipt
and explanation. is document informs the landowner
that the broker is licensed and represents the client and not
the landowner. It suggests to the landowner that they may
nd it helpful to have a real estate agent assist them. is
notication may lead a landowner to seek supplemental
counsel prior to proceeding with negotiations.
Secondly, the landowner may register a complaint with the
REC regarding unfair or perceived improper actions. ese
complaints are dealt with seriously and swily and can result
in a cease and desist letter. In some cases, this may result in
losing the right to practice in the state either for a term or
permanently at the discretion of the REC and based on the
oense. Additional continued education is also a common
component of the REC’s response. North Carolina oenders
appear in the commission’s monthly newsletter with a
summary of their oense and the commission’s response.
Industry Oversight
ere can be advantages to having licensed brokers in your
rm. In fact, once you’ve complied in one state, you may want
to explore reciprocity or licensing in other states. Being a real
estate broker oers valuable benets, and works to enhance
our overall industry standing. Right of way professionals
work alongside multiple disciplines where licensure is
required, and associated standards and regulations are part
of our daily routine. With real estate licensure, right of way
professionals join these disciplines in providing a new level of
land competency.
As major projects continue to garner public attention and
industry professionals continue to be subjected to greater
scrutiny by landowners and lawmakers, it is likely that
greater regulatory oversight will occur. Real estate licensure
oers some states a method of providing industry oversight,
licensure and minimum education requirements. e real
estate industry is diverse and oers multiple specialized
certications. Perhaps one day we may see states add right of
way to this list of certications.
References
Colorado Department of Regulatory Agencies, Division of Real Estate,
Chapter 1: Real Estate Broker’s
License Law, para. IV,A,2(b),(VI)
North Carolina Real Estate Commission Rules, Chapter 58A, A.0502(a)
North Carolina Real Estate Law, Chapter 93A, §93A-2(a); §93A-4.2.
Working with Real Estate Agents, e North Carolina Real Estate Commission,
REC 3.45, 3/1/11.
Steven B. Chastain, SR/WA
Steve is a Project Consultant with Percheron
Acquisitions, LLC, where he manages multiple
intrastate pipeline projects in North Carolina. He
is a licensed North Carolina broker and has been
brokered in Kentucky and Colorado. While not
required to have a real estate license, his expertise
in licensing requirements and more than 20 years
of right of way experience have proven invaluable
for the teams of brokers he manages.
